As Gordon Brown puts the finishing touches to his fifth budget, he can take satisfaction that he has so far proved to be - on most counts - a spectacularly successful chancellor. He has managed as no other chancellor, Labour or Conservative, before him to combine fiscal prudence - reflected in a huge budget surplus - with a forensic approach to social policy that is helping the deserving poor and encouraging the non-working poor back into employment. The big idea that binds his grip on so many areas of the microeconomy is not new, but it is deadly serious. It is to increase opportunity for all: for entrepreneurs to start businesses; for people to educate and re-educate themselves; for the unemployed, including forgotten groups like single mothers, to find work; and, above all, the opportunity for the economy to expand in a sustainable way to create the wealth and tax revenues to underpin the future. It is true the chancellor inherited a benign environment of low inflation and strong public finances - including £9bn of tax increases bequeathed by the outgoing Conservatives. But things can go wrong even within a favourable climate.

There are two serious criticisms. First, he may have avoided stop-go policies for the economy as a whole, but public spending - desperately needed to improve Britain's crumbling infrastructure - actually fell in real terms during his first two years, in fulfilment of a pre-election pledge to match Tory restraint. The Conservatives admit they would never have kept to their own plans. Those two years of inactivity proved beyond doubt to the City that this iron chancellor was not made of cheap alloy. But they also delayed vital investment in education, health and transport.

Mr Brown's most important job on Wednesday is to convert the stop-go of public spending into a sustainable long-term plan that will rid this country of its rotting infrastructure. The chancellor is generally reckoned to have £3-4bn he can prudently "give away" in the budget, of which £1.7bn has already been committed in his pre-budget statement (mainly to placate the road lobby). He should not waste this on tax cuts, however much he might be tempted to throw in a pre-electoral stimulant. Consumers have already spent their way to a record trade deficit, even though - wrongly - few people seem to worry about it any more. The overwhelming priority is to provide 21st-century Britain with railways, hospitals, schools and roads. Mr Brown should pay no attention to the bleatings of the IMF that public investment should be financed entirely by tax revenues and not borrowing - a recipe which, if applied to industry, would bring expansion to a halt.

The chancellor is right to stick to his "golden rule" that spending on non-capital items should paid for out of tax revenues, but that investment, as long as it is cost effective, can be financed by borrowing. And few things are as cost-effective as education, the single factor that most determines long-term economic growth. The government has made a good start, but its aims cannot be secured without more teachers and better qualified ones, particularly in science and information technology. As part of a long-term strategy for public spending, Mr Brown should provide for regular above-norm increases for the teaching profession to restore it to the status of a quarter of a century ago. That ought to count as capital investment, because it will yield a return to the nation in future years.

The second important thing that Mr Brown should do is to address the pound. Sterling has been "strong" for so long now that people and politicians think it does not matter. Yet the years of Labour government have seen an erosion of the manufacturing base on a scale that Mr Brown and others railed against when Mrs Thatcher was in power. Company after company, from BMW to Corus, have been unable to compete because they have been handicapped by a 15 -20% price disadvantage in international markets.

What can be done? The Budget will help, if Mr Brown's plans are deemed prudent enough by the Bank of England to warrant another cut in interest rates. The government could intervene on the foreign exchanges with others. Arguably, the cheapest thing the government could do would be to declare that if it did decide to campaign to join the euro, then it would only go in if the pound was in a much lower target range. Such a move would at least tell the markets that the government has a (lower) target level in mind against which they must make their decisions.

Wednesday's budget is the first pre-electoral one taking place with an independent Bank of England setting interest rates. Mr Brown wrought this change precisely in order to prevent politicians indulging in pre-electoral bribery. The IMF's warning against more public spending, whether the chancellor likes it or not, will be one of the factors the Bank will have to consider before deciding whether the budget is prudent enough to reduce interest rates or whether it will have to raise them. At this pace of change, budgets may soon become a serious spectator sport.